SiTime Corporation (NASDAQ:SITM) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

Following the upgrade, the current consensus from SiTime's five analysts is for revenues of US$167m in 2021 which - if met - would reflect a sizeable 29% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 32% to US$0.32. However, before this estimates update, the consensus had been expecting revenues of US$152m and US$0.39 per share in losses. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

Check out our latest analysis for SiTime

Yet despite these upgrades, the analysts cut their price target 8.1% to US$139, implicitly signalling that the ongoing losses are likely to weigh negatively on SiTime's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic SiTime analyst has a price target of US$156 per share, while the most pessimistic values it at US$150. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the SiTime's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of SiTime'shistorical trends, as the 40% annualised revenue growth to the end of 2021 is roughly in line with the 43% annual revenue growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 8.5% per year. So although SiTime is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around SiTime's prospects. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, SiTime could be one for the watch list.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for SiTime going out to 2022, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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